Global Fundamental Analysis 19/03/2021

Global Fundamental Analysis 19/03/2021, FP Markets

Opening Call: The Australian share market is to open lower.


U.S. stocks fell, led by losses in the technology sector. The yield on the 10-year Treasury jumped to 1.71% as the selling of U.S. government bonds accelerated. The WSJ Dollar Index rose to 86.5. Oil prices dropped on demand worries. Gold prices edged higher.


Australian Market

Australia’s S&P/ASX 200 closed 0.7% lower, going negative for the week as bond yields rose after stronger-than-expected employment data. The benchmark bounced around in early trade and moved lower after data showed that the unemployment rate was 5.8% in February, compared with a forecast of 6.3%.


US Market

U.S. stocks fell as shares of technology companies and other high-growth stocks succumbed to another selloff in the government bond market.  

Investors appeared to be taking a closer look at comments and projections made a day earlier by the Federal Reserve and its chairman, Jerome Powell. Besides reiterating the central bank’s commitment to supporting financial markets until the economy is fully recovers-something investors cheered on Wednesday-the Fed also increased its median projections for growth and inflation based on the latest round of stimulus doled out by Congress.  

Shares of big tech companies were among the stocks that faced the greatest pressure.

That pulled the Nasdaq Composite down 3% and knocked the S&P 500 off 1.5%, a day after clinching a fresh record.  

The Dow Jones Industrial Average, meanwhile, gave up an earlier gain to close 0.5% lower.  

“This morning, the markets woke up and decided if the Fed is going to keep policy so loose, they want higher risk premium,” said Michael Matthews, a fixed-income fund manager at Invesco.



Gold futures shook off early losses to finish slightly higher, after initially rallying overnight as the U.S. dollar slumped in the wake of the Federal Reserve meeting on Wednesday.  

Gold had traded lower early Thursday amid a renewed selloff in government bonds, which pushed yields sharply higher.

Rising yields are negative for gold, as they raise the opportunity cost of holding non-yielding assets. Gold for April delivery rose 0.3% to settle at $1,732.50 an ounce on Comex.


Oil Futures

Oil futures dropped 7%, falling for a fifth straight session to finish at their lowest in more than two weeks, with some analysts noting concern over rising tensions between the U.S. and Russia, as well as a slowdown in the European vaccine rollout.  

West Texas Intermediate crude for April delivery fell 7.1% to settle at $60 a barrel on the New York Mercantile Exchange, with prices suffering their largest one-day percentage loss since Sept. 8, according to Dow Jones Market Data.  

May Brent crude, the global benchmark, declined by 6.9% to $63.28 a barrel on ICE Futures Europe. That marked its largest daily percentage loss since June of last year.



Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1987 to lows near US$1.1906 and was near US$1.1910 at the US close. The Aussie dollar fell from highs near US78.49 cents to lows near US77.48 cents and was near US77.60 cents at the US close. And the Japanese yen fell from near 108.80 yen per US dollar to JPY109.28 yen and was near JPY108.90 at the US close.


European Markets

European sharemarkets advanced on Thursday. The panEuropean STOXX 600 index gained 0.4% with basic materials (+2.1%) stocks up most. The German Dax index (+1.2%) rallied to a record
high. And the UK FTSE index (+0.3%) reversed declines after the Bank of England said Britain’s economic recovery was gathering pace and left policy rates unchanged. In London trade, shares in Rio Tinto (+1.8%) and BHP (+1.4%) both lifted.


Asian Markets

Earlier Thursday, Asian equities were broadly higher in response to the Fed’s vow to keep easy-money policies in place.  

China stocks closed higher as the Shanghai Composite Index added 0.5%, the Shenzhen Composite Index gained 0.9% and the ChiNext Price Index rose 1.6%. In a sign of warming sentiments toward A-shares, which had pulled back sharply in recent weeks, overseas investors were net buyers of onshore Chinese shares for the eighth consecutive session.  

Hong Kong’s Hang Seng Index closed 1.3% higher. Internet giants are broadly advanced.  

The Nikkei Stock Average rose 1.0%, led by gains in banks and semiconductor stocks, but trimmed earlier gains following a report that the Bank of Japan will discuss a potential widening of its yield target range.

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